Avoiding E&O Claims From Catastrophes Sponsored by the Big “I” Professional Liability Program and Swiss Re Corporate Solutions

Webinar Goal: Provide historical statistics and background on catastrophes. Help you agency understand more about: catastrophic exposures facing customers, key coverage considerations regarding products you’re selling, And, how your agency can reduce E&O exposure from them. Offer general agency E&O risk management guidance to assist in the avoidance and mitigation of E&O claims.

Presenters: Dr. Robert Hartwig, CPCU – President of the Insurance Information Institute. Statistical overview of catastrophes Max J. Cohen – Partner at Lowe, Stein, Hoffman, Allweiss, and Hauver LLP Key considerations with Wind, Flood, and Pollution coverages Nathaniel Bunck - Vice President and Claims Team Leader for Swiss Re Corporate Solutions Focus on property loss and Business Interruption. James Redeker – Vice President and Claims Expert for Swiss Re Corporate Solutions Provide information on liability issues to consider David Hulcher – Assistant Vice President of Agency Professional Liability Risk Management Offer general risk management recommendations to avoid E&O claims

Questions: Please send questions to: Nathaniel Bunck at Nathaniel_Bunck@swissre.com Jim Redeker at James_Redeker@swissre.com Max Cohen at mcohen@lowestein.com David Hulcher at David.Hulcher@iiaba.net For technical coverage questions Big “I” Virtual University Experts stand ready to assist at : http://www.iiaba.net/VU/Experts/ExpertsMain.htm

Avoiding E&O Claims from Catastrophes Catastrophe Loss Overview Big “I” Professional Liability Program & Swiss Re Corporate Solutions July 21, 2011 Robert P. Hartwig, Ph.D., CPCU, President & Economist Insurance Information Institute  110 William Street  New York, NY 10038 Tel: 212.346.5520  Cell: 917.453.1885  bobh@iii.org  www.iii.org

eSlide – P6466 – The Financial Crisis and the Future of the P/C Presentation Outline US Catastrophe Loss Update 2011: A Year for the Record Books Spring 2011 Tornadoes & Other Severe Storms ITV , Contents Issues Hurricane Risk Wind vs. Water Flood Risk Standard Flooding Levee Failure Seismic Risk Earthquake Coverage Take-Up Rates Nuclear Exposure (e.g., could Fukishima happen in the US?) 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

US Catastrophe Loss Update 2011 Is a Year for the Record Books But Is Part of a Longer-Term Trend Implies Potential E&O Exposure 7 7

US Insured Catastrophe Losses ($ Billions) $100 Billion CAT Year is Coming Eventually 2000s: A Decade of Disaster 2000s: $193B (up 117%) 1990s: $89B Record Tornado Losses Caused H1 CAT Losses to Surge First Half 2011 US CAT Losses Already Exceed Losses from All of 2010. Even Modest Hurricane Losses Will Make 2011 Among the Most Expensive Ever for CATs *First half 2011. Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01. Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B. Sources: Property Claims Service/ISO; Insurance Information Institute. 8 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C 8

Natural Disaster Losses in the United States: First 6 Months 2011 As of July 6, 2011 Number of Events Fatalities Estimated Overall Losses (US $m) Estimated Insured Losses (US $m) Severe Thunderstorm 43 593 23,573 16,350 Winter Storm 8 15 1,900 1,425 Flood 2,100 in progress Earthquake 2 1 105 Tropical Cyclone Wildfire 37 7 125 50 Thunderstorm insured: 3075 PCS *s 98-16, + 66 PCS #97, -200 to flood in PCS 11 = 2906, + 100 PCS 17, 18 19 20 TBD Thunderstorm econ: MR Natcat, only 100m from PCS 97, only 350m from PCS 11, 130 for PCS 17 Flood Insured: 235 PCS #11 + 200 NFIP (est.) for PCS #11 + 144 flood from PCS 97 + 30 NFIP PCS 97 Flood Econ: Discussed with Angelika, 2b from PCS 11, 300m from PCS 97, + 67 m econ from minor floods in natcatservice Winter Storm Ins: 2360 PCS + 25 crop loss on PCS 90 (MR agro) Winter Storm Econ: MR natCatservice estimate Wildfire: NatCat Service EQ: Natcat service Source: MR NatCatSERVICE 9

Top 12 (13?) Most Costly Disasters in U.S. History (Insured Losses, 2010 Dollars, $ Billions) Taken as a single event, the Spring 2011 tornado season would likely become 5th costliest event in US insurance history *Losses will actually be broken down into several “events” as determined by PCS. Sources: PCS; Insurance Information Institute inflation adjustments. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

Avg. CAT Loss Component of the Combined Ratio by Decade Combined Ratio Points Associated with Catastrophe Losses: 1960 – 2011:H1* Avg. CAT Loss Component of the Combined Ratio by Decade 1960s: 1.04 1970s: 0.85 1980s: 1.31 1990s: 3.39 2000s: 3.52 2010s: 4.15* Combined Ratio Points The Catastrophe Loss Component of Private Insurer Losses Has Increased Sharply in Recent Decades *Insurance Information Institute estimates for 2010 and 2011:H1 Notes: Private carrier losses only. Excludes loss adjustment expenses and reinsurance reinstatement premiums. Figures are adjusted for losses ultimately paid by foreign insurers and reinsurers. Source: ISO; Insurance Information Institute. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

There were 98 natural disaster events in the first half of 2011 Natural Disasters in the United States, 1980 – 2011* Number of Events (Annual Totals 1980 – 2010 and First Half 2011) There were 98 natural disaster events in the first half of 2011 Number 37 8 51 2 Geophysical (earthquake, tsunami, volcanic activity) Meteorological (storm) Climatological (temperature extremes, drought, wildfire) Hydrological (flood, mass movement) *Through June 30. Source: MR NatCatSERVICE 12

U.S. Thunderstorm Loss Trends, 1980 – 2011* Thunderstorm losses in the first half of 2011 totaled $16.4 billion, a new annual record through just 6 months Hurricanes get all the headlines, but thunderstorms are consistent producers of large scale loss. 2008-2011 are the most expensive years on record. Average thunderstorm losses are up more than 8 fold since the early 1980s *Through June 30, 2011. Source: Property Claims Service, MR NatCatSERVICE 13

U. S. Winter Storm Loss Trends, 1980 – 2010 (Annual Totals) vs U.S. Winter Storm Loss Trends, 1980 – 2010 (Annual Totals) vs. First Half 2011 Insured winter storm losses in 2011 totaled $1.4 billion and are up 50% since 1980. Source: Property Claims Service, MR NatCatSERVICE 14

U. S. Acreage Burned by Wildfires, 1980 – 2010 (Annual Totals) vs U.S. Acreage Burned by Wildfires, 1980 – 2010 (Annual Totals) vs. First Half 2011 2011 could be a severe year for wildfire damage. Acres burned through June 30 already exceed all of 2010. Source: National Forest Service, MR NatCatSERVICE 15

WILDFIRE: 10 Most Costly Wildfires, by Insured Loss 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

Tornado share of CAT losses is rising Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1990–2011:H11 Wind/Hail/Flood (3), $12.7 Fires (4), $9.0 Other (5), $0.6 Geological Events, $18.5 Terrorism, $24.9 Winter Storms, $30.0 Hurricanes & Tropical Storms, $160.5 Tornado share of CAT losses is rising Wind losses are by far cause the most catastrophe losses, even if hurricanes/TS are excluded. Tornadoes (2), $119.5 Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2009 dollars. Excludes snow. Does not include NFIP flood losses Includes wildland fires Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation. Source: ISO’s Property Claim Services Unit. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

Number of Federal Disaster Declarations, 1953-2011* The number of federal disaster declarations is on track to set a new record in 2011, with 48 declarations through July 1. There have been 1,998 federal disaster declarations since 1953. The average number of declarations per year is 34 from 1953-2010, though that few haven’t been recorded since 1995. The Number of Federal Disaster Declarations Is Rising *Through July 1, 2011. Source: Federal Emergency Management Administration: http://www.fema.gov/news/disaster_totals_annual.fema ; Insurance Information Institute.

Federal Disasters Declarations by State, 1953 – June 30, 2011: Highest 25 States Over the past nearly half century, Texas has led the US in Federal Disaster Declarations Source: FEMA.

Federal Disasters Declarations by State, 1953 – June 30, 2011: Lowest 25 States Source: FEMA.

Spring 2011 Tornadoes & Severe Storms Few Coverage Disputes, ITV and Contents Disputes Can Sometimes Be an Issue 21 21

Number of Tornadoes and Related Deaths, 1990 – 2011* Tornadoes have already claimed more than 500 lives There were already 1,585 tornadoes in the US by June 30 Insurers Expect to Pay $2 Billion on 165,000 Claims Arising from the April 2011 Tornadoes in the Birmingham and Tuscaloosa Areas *2011 is preliminary data through June 30. Source: U.S. Department of Commerce, Storm Prediction Center, National Weather Service. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

U.S. Tornado Count, 2005-2011* There were 1,585 tornadoes in the US in 2010, slightly above average Tornado activity was off its record pace by mid-year Deadly and costly April/ May spike Source: http://www.spc.noaa.gov/wcm/ *Through July 2. 23

Location of Tornadoes in the US, January 1—June 30, 2011 1,585 tornadoes killed 537 people through June 30, including at least 340 on April 26 mostly in the Tuscaloosa area, and 130 in Joplin on May 22 Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 24

Location of Large Hail Reports in the US, January 1—June 30, 2011 There were 7,176 “Large Hail” reports through June 30, causing extensive damage to homes, businesses and vehicles Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 25

Location of Wind Damage Reports in the US, January 1—June 30, 2011 There were 11,283 “Wind Damage” reports through June 30, causing extensive damage to homes and, businesses Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 26

Severe Weather Reports, January 1—June 30, 2011 There have been 20,044 severe weather reports through June 30; including 1,585 tornadoes; 7,176 “Large Hail” reports and 11,283 high wind events Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 27

Number of Severe Weather Reports in US, by Type: January 1—June 30, 2011 Tornadoes accounted for just 8% of all Severe Weather Reports through June 30 but more than 500 deaths Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html#

Outlook for the 2011 Atlantic Hurricane Season Wind vs. Water Debate Could Potentially Reemerge 29

Outlook for 2011 Hurricane Season: 75% More Active Than Average 2005 (Katrina Year) 2011F Named Storms 9.6 28 16 Named Storm Days 49.1 115.5 80 Hurricanes 5.9 14 9 Hurricane Days 24.5 47.5 35 Intense Hurricanes 2.3 7 5 Intense Hurricane Days 5.0 10 Accumulated Cyclone Energy 96.1 NA 160 Net Tropical Cyclone Activity 100% 275% 175% *Average over the period 1950-2000. Source: Dr. Philip Klotzbach and Dr. William Gray, Colorado State University, June 1, 2011.

Probability of Major Hurricane Landfall (CAT 3, 4, 5) in 2011 Average* 2011F Entire US Coast 52% 72% US East Coast Including Florida Peninsula 31% 48% Gulf Coast from FL Panhandle to Brownsville, TX 30% 47% ALSO…Above-Average Major Hurricane Landfall Risk in Caribbean for 2011 (61% vs. 42%) *Average over the period 1950-2000. Source: Dr. Philip Klotzbach and Dr. William Gray, Colorado State University, June 1, 2011.

US Property Residual Markets Remain Under Strain Some Coastal Policies Need to Obtain All or Part of Their Coverage via State-Run Pools and Plans 32

U.S. Residual Market Exposure to Loss ($ Billions) Katrina, Rita and Wilma 4 Florida Hurricanes Hurricane Andrew In the 21-year period between 1990 and 2010, total exposure to loss in the residual market (FAIR & Beach/Windstorm) Plans has surged from $54.7 billion in 1990 to $757.9 billion in 2010. Source: PIPSO; Insurance Information Institute (I.I.I.); http://www.iii.org/pr/last-resort-2010. 33

U.S. Residual Market: Total Policies In-Force (1990-2010) (000) Katrina, Rita and Wilma 4 Florida Hurricanes Hurricane Andrew In the 21-year period between 1990 and 2010, the total number of policies in-force in the residual market (FAIR & Beach/Windstorm) Plans has more than tripled. Source: PIPSO; Insurance Information Institute; http://www.iii.org/pr/last-resort-2010. 34

Flood Risk, Levee Failures Record Flooding in the US, Possibility of Levee Failures Can Lead to E&O Exposures 35 35

FLOOD: 10 Most Significant Flood Events by NFIP Payouts 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

eSlide – P6466 – The Financial Crisis and the Future of the P/C LEVEES: Probability of Flooding Behind Levees Over Life of 30-Yr. Mortgage Surprise!! There is a 26% chance of a home flooding over the course of a 30 year mortgage behind a levee providing a 1-in-100 year protection level Source: FEMA. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

eSlide – P6466 – The Financial Crisis and the Future of the P/C FLOODING: 2011 Flooding Was Extensive, Especially Along the MS/MO Rivers Widespread, major floods could create a potential E&O exposure for agents Source: US Geological Service. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

Seismic Risk, Earthquakes & Nuclear Power Could the Tragedy of Fukishima Happen in the US Is There an E&O Exposure? 39 39

EARTHQUAKE: 10 Most Costly Earthquakes, by Insured Loss 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

eSlide – P6466 – The Financial Crisis and the Future of the P/C Estimated Insured Losses for the Top 10 Historical Earthquakes Based on Current Exposures (1) ($ Billion) Rank Date Location Magnitude Insured loss (current exposures) 1 Feb. 7, 1812 New Madrid, MO  7.7 $100 2 Apr. 18, 1906 San Francisco, CA  7.8 96 3 Aug. 31, 1886 Charleston, SC  7.3 37 4 Jun. 1, 1838 7.4 27 5 Jan. 17, 1994 Northridge, CA  6.7 21 6 Oct. 21, 1868 Hayward, CA  7.0 7 Jan. 9, 1857 Fort Tejon, CA  7.9 8 Oct. 17, 1989 Loma Prieta, CA  6.3 9 Mar. 10, 1933 Long Beach, CA  6.4 10 Jul. 1, 1911 Calaveras, CA  (1) Modeled loss to property, contents, and business interruption and additional living expenses for residential, mobile home, commercial and auto exposures as of December 31, 2008. Losses include demand surge and fire following earthquake. Policy conditions and earthquake insurance take up rates are based on estimates by state insurance departments and client claims data. Source: AIR Worldwide Corporation. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

Percentage of California Homeowners with Earthquake Insurance, 1994-2010* The vast majority of California homeowners forego earthquake coverage and play Russian Roulette with their most valuable asset *Includes CEA policies beginning in 1996. **2006/10 estimates from Insurance Information Network of CA. Source: California Department of Insurance; Insurance Information Institute.

eSlide – P6466 – The Financial Crisis and the Future of the P/C % of Residences in MO Quake-Prone Areas with Earthquake Coverage, 2009 vs. 2002 Between 32% and 63% of MO homeowners buy quake coverage in vulnerable areas compared to 12% of CA homeowners and about 50% in Japan. Residential Take-Up Rates in Missouri Quake-Prone Counties Have Fallen Significantly in Recent Years, but Compare Favorably to California (12%) Sources: Missouri Department of Insurance news release, Feb. 11, 2011; Insurance Information Institute. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

WILDFIRE: 10 Most Costly Wildfires, by Insured Loss 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

www.iii.org Thank you for your time and your attention! Insurance Information Institute Online: www.iii.org Thank you for your time and your attention! Twitter: twitter.com/bob_hartwig

Lowe, Stein, Hoffman, Allweiss & Hauver, L.L.P. FLOOD, WIND & POLLUTION Max J. Cohen Lowe, Stein, Hoffman, Allweiss & Hauver, L.L.P. New Orleans, Louisiana

Flood Readily available through the National Flood Insurance Program (NFIP) What is the NFIP? Who may purchase a flood policy? Does your community participate in the NFIP? www.fema.gov/fema/csb.shtm 800-427-4661 Big “I” Flood Program – Linda.Mackey@iiaba.net What types of property are insured by a NFIP policy? What property is not insurable? Is there a waiting period? Available to members: Need help writing flood coverage? Check with your state association – they may have a program designed for you. Members can also access to the Big “I” Flood Program. Learn more at: www.iiaba.net/flood

Flood, continued Types of coverage available from the NFIP Dwelling Form General Property Form Residential Condominium Building Association Policy (RCBAP) Limitations on amount of coverage available and valuation Excess Flood Insurance Duty to recommend and/or offer excess coverage

WIND Some policies exclude wind coverage. Some policies are renewed without wind coverage. Some policies are renewed with significant changes in the deductible. Carefully review renewal quotes and policies and inform your client of significant changes. Off-premises power failure

Wind, continued Homeowner policies contain limits for certain items Scheduled items Coverage for wind and/or flood No deductible Does not reduce general limit of contents coverage

Pollution Total Pollution Exclusion Intended to exclude claims for pollution and environmental hazards May or may not be enforceable Application of exclusion in Louisiana Pollution events occur during catastrophes such as hurricanes, tornadoes and earthquakes. Hurricane Katrina - Murphy Oil Refinery Spill

Pollution, continued Available to members: Need help writing environmental impairment-pollution coverage? Big “I” Markets can assist you with your customer’s environmental impairment or pollution needs. Learn more at: www.bigimarkets.com Does your client have a pollution risk? Does your client need a separate pollution and environmental liability policy? Pollution insurance can protect your client’s business in two important ways: First party coverage Third party coverage

Property Insurance Issues with Catastrophes Nate Bunck Vice President and Claims Team Leader for Swiss Re Corporate Solutions

General Property Coverage Issues Setting Limits Wild Fires Protection Class Insuring to value Nuclear Total Nuclear Exclusion? No E&O experience – virtually none in general 1994 Pennsylvania lawsuit Future Concerns Broad Geographic Exposure Applicability of lessons from Katrina

Earthquake Coverage Limited Experience – 3 cases in 10 years "Where" may be surprising Same errors as other lines Future Concerns Broader Geographic Exposure than Perceived Applicability of lessons from Katrina Risk Management Discussion Documentation

Business Interruption Broad experience Katrina/Rita/Wilma Other CAT Events Not commonly understood by insureds Historical Business Interruption Errors: Failure to obtain indirect loss coverage. Failure to add new locations. Failure to arrange proper coverage. Failure to advise of restrictions and limitations in policies. Failure to provide adequate amounts of coverage. Even more important following a CAT claims event

Business Interruption and Global Challenges Interrelated Global Business Systems: Even small businesses in rural areas are increasingly part of a supply and customer chain that can stretch across international borders with multiple, dependant layers. These systems are heavily dependent on new technology and easy access to transportation to rapidly changing markets. These systems are more vulnerable than previously imagined to CAT perils.

Contingent Business Income Insurability for damage to 3rd parties on which the insured is dependant is complicated by new Lean Production Models: “Just In Time” Production Outsourcing Reduced Suppliers Eliminating Stock Third World Suppliers Contingent Extra Expense Designed to cover increased costs following CAT event Avoids Contingent Business

Restricted Access While business interruption damages due to restricted access by official order is generally covered, there is also need for similar losses where there are physical impediments to access but no government order restricting the same. Clear limitation on access will be the challenge rather than showing a direct causal connection to the damages. Natural Catastrophe Driven - Avalanches, Landslides, Earthquakes. Events that make access difficult but not technically impossible.

Service Interruption IT Outage Loss of Data Local Outages External Network Outages Loss of Data IT failure presents additional complications to insurability due to pace at which network changes and updates are made, as well as the ever changing security environment.

Future Challenges for Agents Increasing number of risks that include the elements of conventional business interruption insurance, but are not triggered by direct property damage. Heightened Evaluation of Client’s Risks Increasingly Changing Nature Wider Breadth of Risk Quantify Damages As carriers expand coverage for these risks or major CAT events test expectations around such coverage, we expect claims around these products.

Liability Issues with Catastrophes Jim Redeker Vice President and Claims Expert for Swiss Re Corporate Solutions

Commercial General Liability General policy exclusions include: Asbestos Lead Mold Nuclear Pollution (and pollution related damages) Silica Umbrella Coverage – Make sure it follows form.

Professional Liability Directors & Officers exposures include: Home Owners Associations Condo Associations Errors & Omissions exposures include: Architects & Engineers Insurance Agents *Anyone who provides a service for a fee has an errors & omissions exposure.

Business Continuity Management While Risk Management protects the company’s earning power, BCM focuses on ensuring that a company can quickly recover from disruptions to its operations. A BCM plan will include how the company will work with its insurance carrier to: Provide first notice, Mitigate losses, Provide financial data for loss evaluation, and Minimize the duration of the interruption loss.

Business Continuity Management Estimation: Identifying and prioritizing all possible business interruption risks by likelihood and amount of damage to the company’s income. Design: Formulating a plan for addressing each interruption concern and putting resources in place. Management: Both initial and ongoing testing of the plan will be necessary to ensure that it meets and continues to meet business needs. In addition, testing should identify areas where risks can be greatly reduced and/or eliminated.

General Agency E&O Risk Management Guidance David Hulcher Assistant Vice President of Agency Professional Liability Risk Management for IIABA

E&O Risk Management Considers of Catastrophes IT TAKES AN UNCOVERED CLAIM E&O claim ≠ you did something wrong “To say or Not to Say” E&O risk management culture within the agency STATE STANDARD OF CARE AND DUTY TO ADVISE CUSTOMER Understand your duties Legal duty vs. agency best practices Article at www.iiaba.net/EOhappens under “Standard of Care” tab “Say what you do and do what you say!”

Risk Management, continued: Exclusive to members: Commercial and Personal Lines Risk Exposure Evaluation System (including E&O coverage checklist) PF&M provide detail analysis of policy forms and endorsements Insurance Word Glossary Insurance related articles to educate customers. Learn more at: www.iiaba.net/VRC PRODUCT KNOWLEDGE What’s covered and what’s not Invest in training staff (work with your state association) Educate your customer (www.trustedchoice.com) KNOW YOUR CARRIER AND YOUR AUTHORITY Financial ratings Carrier contracts and binding authority UNDERSTAND YOUR CUSTOMERS OPERATION Communication Risk exposure identification Exposure analysis and increased profits

Risk Management, continued APPLICATIONS Timeliness Additional steps to bind Material facts Customer signature PROPOSALS Give options, let customer decide Increased limits – umbrella/excess policies Disclaimer language Explain complex terms Coverage limitations or uncovered exposure Duties in event of a claim Expiration date on quotes and proposals Sample proposal disclaimer language: This is a proposal (or summary) provided for illustration purposes only; it is not a legal contract. It is provided to facilitate your understanding of your insurance program. Please refer to the actual policies for specific terms, coverage, conditions, limitations and exclusions that will govern the event of a loss. Specimen copies of all policies are available for review prior to the binding of coverage. In assisting you with your insurance needs we have been dependent upon information provided to us by you. If there are other areas that need to be evaluated prior to binding of coverage, please bring them to our attention.  Should any of your business operations or exposures to loss change after coverage is bound, it is the customers responsibility to let us know promptly so proper coverage(s) can be discussed.

Risk management, continued E&O Coverage Checklist/Rejection Forms Coverages available and offered/rejected File documentation Documentation: Importance in an E&O claim Reductions in coverage and limits Consistent procedures Invariable practice Documentation - Who, What, Where, When, How

Risk Management, continue Available to members: Agility works with over 1,000 insurance agencies helping them be prepared to get back in business after a disaster. They provide disaster preparedness services like remote location or “hot site” or their Agility ReadySuite mobile replacement office capability. Learn more at: www.agilityrecovery.com Claims Coverage determination Reporting claims to carrier Notify all relevant carriers Follow-up until resolution Disaster Plan for the Agency Business continuity plan Resources available: Best Practices of Crisis Management—A Step-By-Step Business Recovery Planner

Risk Management, continued: Catastrophe extra expense Swiss Re policy feature at no extra charge CATASTROPHE EXTRA EXPENSE. We will pay up to $10,000 per catastrophe subject to a per “policy period” aggregate limit of $25,000 for the actual extra expenses incurred by you as a result of a catastrophe during the “policy period” beginning on the date of a catastrophe and for thirty (30) days thereafter. The extra expense incurred must be incurred by you only to assist in the insurance claims processing needs of your customer(s) who have been affected by the catastrophe. The catastrophe must be a declared catastrophe by the Property Claims Services. A $500 Deductible for each “claim” shall apply to each “claim” made under this paragraph. Limits provided by this paragraph are part of and not in addition to the limits provided by this “policy.”

Questions: Please send questions to: Nathaniel Bunck at Nathaniel_Bunck@swissre.com Jim Redeker at James_Redeker@swissre.com Max Cohen at mcohen@lowestein.com David Hulcher at David.Hulcher@iiaba.net For technical coverage questions Big “I” Virtual University Experts stand ready to assist at : http://www.iiaba.net/VU/Experts/ExpertsMain.htm

Thank you

Legal notice ©2011 Swiss Re and IIABA. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re and IIABA. Although all the information used was taken from reliable sources, Swiss Re and IIABA does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies and IIABA be liable for any financial and/or consequential loss relating to this presentation.